Mohegan Sun slashing $13 million in expenses

Mohegan — More snow and colder temperatures than last year led to declining profits in the second quarter for the Mohegan Tribal Gaming Authority, which announced Wednesday cost-cutting that would shave $13 million off its annual expenses in Connecticut.

“Most of it is non-personnel related,” said Bobby Soper, president and chief executive of Mohegan Sun, during a conference call with industry analysts Wednesday.

Soper said cost-cutting would involve tweaks to the casino’s prescription drug program, renegotiated reductions in bus subsidies to bring in patrons as well as the elimination of bus lines that generate lower profit margins.

No layoffs are planned, but Mitchell Etess, the gaming authority’s chief executive officer, said in a follow-up phone interview that changes to employee schedules would create efficiencies, as would reductions to some of its marketing programs, including so-called “free play” slots.

“The winter’s been horrible,” Etess said in the conference call. “Our results for the quarter were mixed.”

Lower slot revenues at Mohegan Sun casino led to a 9.8 percent decline in profits for the Mohegan Tribal Gaming Authority in the second quarter of its fiscal year compared with the same period last year. The results — $60.3 million in profits in the quarter versus $70.1 million in the same period last year — “were nothing to write home about,” Etess said, but turned out better than for most of Mohegan Sun’s industry peers, despite increased competition in Connecticut as Foxwoods Resort Casino ramped up its free-slot promotions.

The gaming authority said revenue generated at Mohegan Sun and Pocono Downs in Wilkes-Barre, Pa., totaled $316.7 million in the quarter, of which $243.5 million was attributed to the Uncasville facility. Total revenue was down 2.8 percent in the second quarter compared with the same period last year. The gaming authority’s fiscal year begins Oct. 1, and the three-month period ending March 31 is its second quarter.

“Considering a number of factors outside of our control, including unfavorable weather, a continued sluggish economic backdrop and tough comparisons, our properties performed quite well,” Etess said in a statement. “We continue to pursue new measures to improve efficiencies at our properties and explore initiatives to diversify into new jurisdictions.”

Etess said the gaming authority is expecting to find out in late August about its bid for a casino license in Revere, Mass. He added that the gaming authority, which estimated during the conference call investing at least $30 million in pursuing the Massachusetts license, had originally expected to hear about a final decision in June.

Mohegan Sun also has its hat in the ring for the final casino license to be awarded in Philadelphia, he said, and the gaming authority paid $1 million to pursue a license for another facility in upstate New York.

Etess added that the gaming authority is in the final design stage for a new 400-room hotel near the north entrance of Mohegan Sun that would help accommodate crowds looking for a place to stay on busy weekends and on the days of major concerts.

“We have so much more demand for hotel rooms,” Etess said in the phone interview. “There’s a lot of people who would like to stay on premises.”

In Connecticut, Etess reported, the second quarter was marked by 16 snow days compared with 12 snow days in the same period last year. And while a major blizzard affected operations last year, he said, the casino was more easily able to reduce expenses and downsize its operations because of the predictability of the storm’s effect.

“This year, the storms were one-offs,” Etess said.

More concerning may have been the number of extremely cold days this year, he added, which kept clientele — particularly the older demographic — away. It also increased costs to heat the casino, he said.

The authority reported gaming revenues of $278.4 million, a 4.5 percent decrease from the second quarter of last year. Slot revenues were off 6 percent, totaling $193.6 million.

Non-gaming revenues was the only area that saw an increase, up 9.6 percent to $60.5 million. Etess attributed the gains to more events at the Mohegan Sun Arena as well as the opening of a new hotel at Pocono Downs.

Table game revenues of $82.2 million were off 1.2 percent from last year’s second quarter, though the amount of money wagered at tables increased slightly.

The gaming authority reported total debt of $1.76 billion.

“We’re focused on reducing our debt and paying it down,” Etess said in a phone interview.